Kessly v Benjamin & Khoury Pty Limited

District Court of NSW|2018-11-14

A. Background

From 19 June 2015 Benjamin & Khoury, solicitors, acted for Evangelina Kessly in proceedings in the Court of Appeal. A substantial amount of the solicitors' costs were not paid by Ms Kessly. The solicitors successfully applied for an assessment of those costs, and after an application for a review by Ms Kessly on 22 November 2016, the Review Panel affirmed the earlier assessment and issued certificates in respect of sums of costs. On 18 February 2018 judgment was entered in respect of those certificates.
By a summons filed 24 April 2018, Ms Kessly sought an extension of time to file a summons, leave to appeal against the decision of the Review Panel, that the appeal be allowed, and other orders.
In respect of an application for leave to appeal, and in respect of an appeal, the operative rules require filing of the summons within 28 days of the Review Panel's decision or "within such further time as the higher court may allow". [1]
In this case, the 28-day period for filing of the summons expired on about 20 December 2016 and therefore the summons filed by Ms Kessly on 24 April 2018 was more than 16 months out of time. Perhaps because of this substantial period, the parties proposed to deal first with the application for extension of time only. That component of the summons is the subject of this judgment.
By operation of cl 18(1)(b) of sch 4 to the Legal Profession Uniform Law (NSW), the provisions of the Legal Profession Act 2004 (NSW) and the Legal Profession Regulation 2005 continue to apply to this matter since Ms Kessly first instructed the defendant in the matter before 1 July 2015.

B. The issues

The parties accepted that whether the Court should make an order to extend the time for the filing of the summons depended on four matters: the length of the delay, the reason for the delay, whether the appeal was reasonably arguable, and the extent of any prejudice by reason of the delay. These are the factors that govern the exercise of the Court's discretion and constitute the issues in this application.
The circumstance that both an appeal and leave to appeal can independently co-exist in the same summons arises because of the applicable provisions of the Legal Profession Act 2004. Under that Act, s 384 provides that: "384 Appeal against decision of costs assessor as to matter of law (1) A party to an application for a costs assessment who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings…may…appeal to the Court against the decision. …"
And in s 385: "385 Appeal against decision of costs assessor by leave (1) A party to an application for a costs assessment relating to a bill may…seek leave of the Court to appeal to the Court against the determination…made by a costs assessor. …"
Section 382 of the Act provides that in relation to a determination of the Review Panel, references to a costs assessor are relevantly references to the Review Panel.
Whether or not an election was required as to which avenue of challenge Ms Kessly maintained, appealing against the Review Panel's decision under s 384 or electing to appeal under s 385, Ms Kessly determined, at least on the extension of time application, that the application for leave to appeal under s 385 would not be pursued. She expressly abandoned order 2 of the summons which sought "Leave to Appeal from the whole of the decision below".
Further, Ms Kessly relied only upon grounds 1, 3, 6 and 7, and on a particular construction of those grounds. She expressly abandoned any reliance upon the other grounds, at least in relation to the extension of time application and, in particular, whether she had a reasonably arguable appeal. The content and ambit of those grounds are considered below in the context of whether those grounds are reasonably arguable.

C. Length of the delay

The filing of the summons is more than 17 months after the Review Panel's decision and more than 16 months after the period specified for the filing of a summons for appeal. This is a substantial delay and the policy interest in the finality of litigation weighs significantly against an order extending the time for this period.

D. Reasons for the delay

Ms Kessly swore an affidavit recounting the events that occurred following the decision of the Review Panel. The affidavit reveals the following matters: 1. Ms Kessly did not instruct her then solicitors, Boyd House & Partners, who had acted for her in the application to the Review Panel, to commence an appeal against the Review Panel's decision until 11 January 2017, some three weeks approximately after the 28‑day period had elapsed. The Christmas/New Year vacation period would perhaps lessen the significance of this period of delay. 2. Ms Kessly decided to seek other solicitors to assist her in about late January 2017 because she found unreasonable a request by Boyd House that she provide some funds to be held in trust. The extent of the funds requested by Boyd House was not described in the affidavit and as it is a matter presumably within Ms Kessly's knowledge, I would not infer that the amount was substantial. Further, the circumstance that the instructions requiring the filing of an appeal would involve disbursements, at least a filing fee, indicates that it would not be unreasonable for there to be a request for some funds to be paid in trust to cover disbursements. What, if any, fees Boyd House had invoiced or been paid in respect of the application to the Review Panel was not the subject of evidence. 3. Apparently two months passed before Ms Kessly met with another solicitor in late March 2017. That retainer appeared to be terminated in mid‑April because of an inability of the solicitor to devote sufficient resources to it. This period of inaction of some two months, from January to March, remained unexplained. 4. Ms Kessly then "contacted" the Law Society Referral Service. The consequence of that contact is not revealed. She then "approached" a barrister who referred her to another barrister, although it is unclear if the latter was contacted. She also approached Legal Aid without success. 5. Still in April 2017, Ms Kessly met with a further solicitor and provided documents to the solicitor on 2 May 2017. On 12 May she emailed the solicitor about the delay. No further detail about that retainer is revealed. 6. A further month passed about which the evidence is silent. In the following three months, mid‑June to mid‑September 2017, Ms Kessly "attempted to engage two other law firms to act on [her] behalf, without success". I also do not regard this as a satisfactory explanation of this three-month period of delay. 7. She then in mid‑September 2017 approached the New South Wales Bar Association Legal Assistance Referral Scheme, who notified her on 20 November 2017 that as a barrister's view was that she "did not have reasonable prospects of success", the Bar Referral Scheme suggested she access the "Find a Barrister" facility and ceased involvement in the matter. 8. Ms Kessly then apparently took no action for three months, until February 2018 when a further solicitor was engaged to act in relation to the appeal and a bankruptcy notice she had received consequent upon the registration of a judgment on 18 February 2018 based on the Review Panel's certificates of determination. That retainer appears to have been terminated a month later, when the solicitor informed Ms Kessly that "she was going on holidays", because Ms Kessly "was not comfortable knowing that a junior solicitor would be attending to the appeal". 9. On 17 April 2018 Ms Kessly engaged her current solicitor and an appeal was lodged shortly thereafter.
Accordingly, Ms Kessly's delay can in part be attributed to a request for funds in trust, a view that she had no reasonable prospects, and other reasons proffered by solicitors she contacted such as insufficient staff or holidays. The totality of these matters does not seem to me to be a good explanation for the 16-month delay. There were repeated periods of two to three months where little or nothing appeared to be done by Ms Kessly.
Further, if Ms Kessly wished to commence the appeal after the specified period had elapsed and she had no one acting for her, she needed to take her own steps to do so. The circumstances that a legal practitioner did not believe Ms Kessly had reasonable prospects of success would preclude the legal practitioner from acting, [2] which would leave self-representation as her only option. There was no direct evidence that she was unable, herself, to file a summons once she determined not to retain Boyd House and had no ready alternative solicitor.
I do not regard Ms Kessly's account as a satisfactory explanation for the 16‑month delay, nor does it provide a satisfactory excuse for not commencing the appeal at least in the first six months of 2017.

E. Extent of prejudice

As a result of Ms Kessly's delay, Benjamin & Khoury have registered a judgment, issued a bankruptcy notice and engaged in the defence of an application for extension of time. Although no details of the costs expended on these matters are in evidence, I cannot suppose that they were trivial. It may be that a condition on the extension of time, such as a costs order and payment, could alleviate some of this prejudice. However, legal expenses are not the only prejudice arising from delay, [3] and in respect of those expenses there is no assurance that the costs orders will be met with actual payments.
Ms Kessly put on no affidavit to indicate that she has the means to meet costs wasted by her delay or the cost judgments against her. Her affidavits [4] rather might suggest that she was determined not to pay any further costs to Benjamin & Khoury, even though the amount of the unpaid judgment was significant, in the order of $80,000.
Ms Kessly did not proffer any assurance that any costs or conditions on an extension of time would be met. Her submission that she had an investment property of uncertain gross or net value and that no security for costs of the summons was sought by the solicitors against her does not deny the prejudice or remove my doubts as to whether any cost orders will ultimately be met.
In these circumstances, I was satisfied that there was both real and presumptive prejudice to Benjamin & Khoury that would not have been cured by an order or conditions.

F. Arguable case

As mentioned earlier, Ms Kessly relied only on two aspects of her grounds of appeal. Firstly, grounds 1 and 3, and secondly, grounds 6 and 7.

(a) Grounds 1 and 3

Grounds 1 and 3 are as follows: "1 The Review Panel erred by reason of its failure to provide the Appellant an opportunity to respond to matters raised by the Review Panel prior to the determination of the Review Application. … 3 the Review Panel failed to properly exercise its functions pursuant to subsection 375(2) of the Act by failure to give due consideration to submissions made to the costs assessor as per subsection 359(1)(b) of the Act."
Ms Kessly relied upon these grounds to assert her principal claim for an arguable case, namely that she was denied procedural fairness because no itemised bill of costs was served upon her.
It can readily be seen that neither ground refers to procedural fairness, or its denial, or service, of a bill of costs, itemised or otherwise. It is difficult to find this ground within the terms of Grounds 1 and 3.
Nevertheless, the solicitors did not take this pleading point and were content to argue the claim of a denial of procedural fairness notwithstanding the absence of the ground in the summons.
The evidentiary foundation for this ground is found in Ms Kessly's affidavit of 24 April 2018. There she deposed to having spoken to the Assessor in a phone call on 6 May 2016, which resulted in the Assessor immediately terminating the call, presumably because it was a private conversation with only one of the parties while the other was not present. Her evidence is that she said to the Assessor, "I did not receive the paper work for the bill and I don't know what to answer". [5]
The same day Ms Kessly sent a letter to the solicitors with a copy to the Assessor. No request was made of the Assessor. The letter was dated April 06, 2016 and stated: "I refer to your email of April 28, 2016, and advise that your claim for costs in your Express Post mail of October 26, 2016, did not contain any details of your claim, only a cover letter. Consequently, I am unable to respond, as I have no idea what is being claimed." [6] Her request for the documents followed.
The letter had two errors, incorrectly dating the letter a month earlier and incorrectly dating the express post mail a year late.
There is no explanation as to why Ms Kessly took no action from 26 October 2015 to 6 May 2016 to inform the solicitors that while she had received the cover letter, she did not receive the accompanying material, including the application and the itemised bill of costs.
Ms Kessly's affidavit records that on 28 April 2016 the solicitors provided a letter to Ms Kessly, the details of which were not included, but on 30 April 2016 Ms Kessly was given by the Assessor a further 14 days "to provide her objections to the bill". [7]
At about the same time as her letter of 6 May 2016, Ms Kessly "sent submissions to the Assessor in response to the Application filed by [the solicitors]". Those submissions comprised 7 pages and 50 paragraphs. Much of the submissions detailed complaints of the way the solicitors conducted the litigation in the Court of Appeal. The submissions included the following: "9. It was never made known to me that the hourly rate for Mr Khoury was $550.00 per hour… 35. I object to the amount of money I have already paid, being at least forty thousand five hundred dollars ($40,500.00) to Benjamin and Khoury for legal services. I am still awaiting my bank to identify any further bank cheques and/or payments I might have paid to them. I dispute that these solicitors can justify this amount of costs, they having failed to argue for costs at the appeal hearing. Only a few receipts have been issued in respect of my payments to them. 36. I feel at a disadvantage to deal against a solicitor in a dispute about legal costs. I believe that he has taken me for advantage as they consider I am ignorant about the law in Australia and therefore vulnerable. … 46. I asked Benjamin and Khoury why they did not take into account the rights for the legal costs for the appeal. I have already paid at least $40,500.00 to Benjamin and Khoury. I believe that the $40,500,00 that I have already paid is too much for the kind of services that I have received… 47. Therefore, I object and dispute the entire amount of money I have paid to Benjamin & Khoury. I want to have assessed the amount of money they have already received (at least $40,500.00). I believe it is far too much already for fee services provided. 48. I object and dispute the total of money (at least $117,368.40) in legal costs claimed, to be vastly excessive… … 50. I did complain in our meetings that their billing was excessive, and they kept applying discounts, which indicates that they knew they were charging too much to start with. I refuse to pay for work that does not represent value."
I have quoted these parts of the seven-page submission because they were the matters referred to in oral argument. Although the submissions refer to some matters of detail - the hourly rate of Mr Khoury, the total sum of costs, and the amount Ms Kessly has paid - the submissions made no reference to her having no access to the solicitors' application and gave no explanation as to how she was able to respond to the application without having it. The solicitors' affidavit of Dieb Khoury, not challenged, established that the covering letter which Ms Kessly received was in an envelope of three kilograms weight with postage of $14.80, and it was impossible for the covering letter to be served without the application including the itemised bill of costs. Whether or not Ms Kessly actually received the application, it seems plain that it was served in October 2015 in accordance with the requirements of service and I did not understand that to be challenged.
Ms Kessly deposed: "On or around July 2016, an incomplete copy of B & K's Application and the documents relied on by B & K on its Application was delivered to my house. I notified the police about my mail theft on 21 July 2016". This evidence implied that although service had occurred, she was disadvantaged until July 2016 by reason of a theft. That is, the inference I draw from this paragraph is that although the documents were served, part of them were stolen in October 2015 and then returned in July 2016.
Ms Kessly has not identified any other occasion when she received the bill and the application. However, the uncertainty of whether Ms Kessly received the application in October 2015 or before May 2016 is of no particular moment. Prior to lodging an application for review, when represented by solicitors, she had received the application and the documents relied upon. [8]
With the aid of Boyd House, Ms Kessly lodged an application for review of the Assessor's decision on 28 July 2016. The application identified ten grounds. None of those grounds refer to the absence of or lack of access to the itemised bill of costs or application.
As this appeal is against the Review Panel's decision, the circumstance that Ms Kessly received the application and "the documents relied upon by [the solicitors] on its application" before submitting her appeal means that she has not then been deprived of any relevant documents and has had a fair opportunity before the Review Panel to challenge any part of the bill. She had legal representation, yet her grounds on the review (like her submissions in the assessment, and in part also like her grounds on this appeal) did not identify this procedural unfairness of being deprived of the bill or the application.
Even at this hearing, Ms Kessly did not identify any aspect of the bill that she challenged. Rather, as her submissions to the Assessor and her grounds of review manifest, her complaint tended to concern the manner of the running of her appeal in the Court of Appeal rather than any particular expense. Her reference to not being informed of Mr Khoury's hourly rate may be a counter-example, but it cannot be right since the cost disclosure she signed expressly identified that hourly rate.
Ms Kessly submitted that s 375(3) of the Legal Profession Act 2004 precluded her putting submissions or fresh evidence before the Review Panel. But that rule was subject to the provision "unless the panel determines otherwise". Ms Kessly was presumably entitled to and did put a list of grounds before the Review Panel. Those grounds did not mention the absence of the itemised bill. If she wanted to develop this point (that she had no application or itemised bill at the time of the Assessor's determination) with further submissions or evidence, she need only to have asked. She had legal assistance. Yet she declined to take that step. A Review Panel cannot reasonably be expected to consider and grant leave to file submissions or further evidence if it is not requested.
No practical injustice has been shown as Ms Kessly lost no opportunity to present her case to the Review Panel. [9]
In my view, there was no relevant procedural unfairness because the evidence indicated that Ms Kessly had the application and documents relied upon before she commenced her application for review, and also she took no point about any absence of documents in that application. The point is not reasonably arguable.

(b) Grounds 6 and 7

Grounds 6 and 7 are in the following terms. "6 The Review Panel erred by reason of their failure in their determination to apply or consider the provisions of section 317(4) of the Act and determining not to apply a reduction to the bill of costs of the Respondent by reason of the Respondents breach of section 309(1) of the Act. 7 The Review Panel erred by reason of its failure to apply, identify or consider the provisions of the Act to have the Respondents Costs Agreement set aside for failure of the Costs Respondent to comply with all parts of its duties under section 309 of the Act."
Ms Kessly relies upon s 317(4) of the Legal Profession Act 2004 which provides: "(4) Reduction of legal costs on assessment If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed, then, on an assessment of the relevant legal costs, the amount of the costs may be reduced by an amount considered by the costs assessor to be proportionate to the seriousness of the failure to disclose."
She also relies upon s 309(1)(c) which provides: "309 Disclosure of costs to clients (1) A law practice must disclose to a client in accordance with this Division: …. (c) an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs, and …"
Ms Kessly asserts that the estimate of costs was not disclosed in accordance with s 309(1)(c), so an entitlement to a reduction in costs under s 317(4) was enlivened.
There are several difficulties with this ground.
First, an estimate was given in the costs disclosure.
Second, Ms Kessly's affidavit acknowledges repeated further disclosures such that the final estimate roughly approximates, within about 10%, the total of the costs charged.
Third, s 309(1)(c) is concerned with the absence of an estimate, not with its level of accuracy.
Fourth, s 317(4) authorises a reduction in legal costs, but does not require a reduction. Any reduction appears to be limited to what is proportionate to the seriousness of the failure to disclose. If there was no failure to disclose, the section implicitly precludes a reduction on the basis of an inaccurate estimate. At least it makes no specific provision for such a reduction.
Fifthly, no complaint about the failure to provide an estimate was raised with the Assessor or the Review Panel.
Faced with these difficulties, Ms Kessly submitted that the disclosure and costs agreement contemplated a fixed sum for costs. But the disclosure and costs agreement calls it an estimate. It expressly states that "it is not a quotation" and is "subject to revision" and, as mentioned, Ms Kessly's affidavit acknowledges this estimate was revised by later estimates. There is no substance to this ground. In my view, it is not reasonably arguable.

G. Conclusion

Accordingly, Ms Kessly's appeal was filed very late. Her explanation for the delay was unsatisfactory, there remains a prejudice to the solicitors which I am satisfied cannot be cured by costs orders or conditions on the extension of time application, and the grounds of appeal that she advanced on this application were not reasonably arguable. These matters persuade me that no extension of time to appeal should be allowed.
If no extension of time is allowed, the summons must be dismissed. The parties accepted that if this were the result, costs should follow the event.
The orders are therefore: 1. Summons dismissed. 2. Plaintiff to pay the defendant's costs.

Endnotes

For leave to appeal, Uniform Civil Procedure Rules 2005 ("UCPR") r 50.12(1); for appeal UCPR r 50.3(1).
See Legal Profession Uniform Law Application Act, sch 2, cl 2(1).
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [5] per French CJ, and [98] and [111] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
See e.g. 24/4/15 at [6].
At [40].
Exhibit A, p 62.
Exhibit A, p 64.
Or so it appears; Ms Kessly's affidavit is somewhat inconsistent on this subject, see affidavit of 24/4/18 at [38(a)-(c)].
See Minister for Immigration and Multicultural Affairs, Re; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [37]-[38]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 December 2018

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